Warning: file_exists(): File name is longer than the maximum allowed path length on this platform (260): C:\zpanel\hostdata\zadmin\public_html\forexbr_com_br/wp-content/cache/supercache/www.forexbr.com.br/2020/03/15/bond-report-treasury-yields-slide-as-fed-boosts-asset-purchases-by-at-least-700-billion-and-slashes-rates-to-zero/meta-wp-cache-30f957d03187da570ee1185e3833fa74.php in C:\zpanel\hostdata\zadmin\public_html\forexbr_com_br\wp-content\plugins\wp-super-cache\wp-cache-phase2.php on line 71 Bond Report: Treasury yields slide as Fed boosts asset purchases by at least $700 billion and slashes rates to zero – Forex Brasil

Bond Report: Treasury yields slide as Fed boosts asset purchases by at least $700 billion and slashes rates to zero

Treasury yields traded sharply lower on early Monday as investors dove into government paper following the Federal Reserve’s emergency announcement Sunday that it would ramp up its bond-buying purchases and cut rates to rock-bottom.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -19.89% fell 18 basis points to 0.768%, while the 2-year note rate TMUBMUSD02Y, -30.09% was down 18.4 basis points to 0.314%. The 30-year bond yield TMUBMUSD30Y, -9.78% dropped 15.4 basis points to 1.399%. Bond prices move inversely to yields.

What’s driving Treasurys?

Amid weakness in global stocks, U.S. equity futures fell by its 5% daily limit on Sunday night, indicating a sharp fall at the opening bell for Wall Street on Monday. This helped to spur inflows into government bonds, traditionally considered a safe-haven asset.

See: Stock-market futures sink after emergency Fed rate cut — ‘if this doesn’t work, what will?’

On Sunday, the Fed announced a series of measures aimed at restoring the functioning of the Treasurys market, which has suffered from a lack of liquidity in the past few weeks. It also said it would attempt to support the flow of credit and ensure overseas financial institutions had enough access to dollar funding.

The U.S. central bank cut rates by a full percentage point to a range between 0% and 0.25% in a bid to support the economy as businesses grapple with the economic blow from the COVID-19 outbreak.

The Fed also said it would buy at least $500 billion of Treasurys and $200 billion of mortgage-backed securities over the coming months, starting from Monday. It said it would roll over all principal payments from the Fed’s holdings of government bonds and agency mortgage-backed securities.

Exclusive: Fed is ‘throwing money in the wrong place,’ says Sheila Bair, former top banking regulator

Read: These are the dysfunctions in the U.S. bond market that will lead the Fed to buy at least $500 billion of Treasurys

In economic data, the Empire State manufacturing survey for March, to be released at 8:30 a.m. ET, could point to slowing factory output in New York state.

Investors will also view the January Treasury International Capital report at the end of the day. The widely-watched data offers insights on demand for U.S. government bonds and other assets among overseas investors.

What did market participants’ say?

“The Fed is doing all that it can, and another inter-meeting cut is evidence that they are ‘on the job,’” wrote Jason Brady, president and CEO of Thornburg Investment Management.

“The additional bond buying is reasonable and has precedent, but mostly this underlines the lack of power the Fed has in the short term,” said Brady.

Opinion:A feckless Fed, huge deficits and poisonous politics bring us to a crisis